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--State Council Counsellor Liu Sees Unprecedented Challenges to Growth
--FY Growth Won't Break Below 5%, Higher If Outbreak Contained
--Part 1 of 2-Part Interview
BEIJING (MNI) - China can still achieve economic growth of around 6% this
year if the coronavirus outbreak is contained by the end of March and the
government takes quick action to boost business activity, Liu Huan, a counsellor
to the State Council, said in an interview with MNI.
Full-year growth "is not going to fall through 5%," even as the economy
faces "unprecedented" challenges in Q1, and perhaps further into the year, said
Liu, who was appointed as an official advisor to the government in 2011 and is
the vice dean of the School of Taxation, Central University of Finance and
Economics, as well as deputy director of the economy committee of Beijing's
Chinese People's Political Consultative Conference.
Some government targets may have to be amended, he added.
The government now recognises that some tough measures taken to prevent the
spread of the virus, including keeping businesses shut, were excessive, Liu
said, adding that officials had to target both the continued fight against the
coronavirus outbreak and restoring full economic production.
"If production can't get up-to-speed, the economy will collapse in a couple
of months," Liu said by phone on Wednesday.
"It is concerning how long the businesses can last as the turning point of
the outbreak hasn't arrived," Liu said, noting uncertainty will cause a bigger
impact on the economy.
--WORSE THAN SARS
The coronavirus outbreak's impact on China's service-dominant economy will
be greater than that caused by SARS in 2003, when China had just joined the WTO,
was enjoying low-labour advantage and when manufacturing was the main driver,
Businesses involved in efforts at combatting the epidemic, such as
manufacturers of masks and medical supplies, will lead the recovery, Liu said.
Judging by the experience following the 2003 SARS outbreak, which had less
impact than the current epidemic, consumption, including tourism, transportation
and dining should see "a big rebound" as consumers will likely celebrate being
able to go out again, he said.
The online economy, including e-commerce, distance education and working
from home, has received a boost with so many people trapped indoors, and
authorities should "grab this opportunity" to boost quality and efficiency of
the economy, Liu said.
"The recovery could occur fairly quickly," Liu said.
Liu conceded that fiscal gaps will "very likely" increase given that last
year's tax and fee cuts had already created "huge" revenue difficulties, while
fighting the virus and infrastructure programmes will require higher spending.
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